Canada Dollar Trades Weaker Than Parity Versus U.S. for 7th Day

The Canadian dollar traded below
parity against its U.S. counterpart for the seventh day even as
a report showed the world’s 11-largest economy grew faster than
forecast in November.

The currency, nicknamed the loonie for the image of the
aquatic bird on the C$1 coin, fluctuated after Canada’s gross
domestic product expanded 0.3 percent, the fastest pace in seven
months, Statistics Canada said today in Ottawa. The median
forecast in a Bloomberg economist survey was for a 0.2 percent
expansion. The loonie dropped earlier after a report showed
German retail sales fell more than economists predicted last
month.

“Canadian numbers had a small positive surprise,” said
Shaun Osborne, chief currency strategist at Toronto-Dominion
Bank (TD), by phone from Toronto. “I think that keeps the GDP
tracking more or less in line with something where the bank is
and where we are. We may have seen all the reaction we’re likely
to see on the Canadian dollar for the moment.”

The loonie was little changed at C$1.0009 per U.S. dollar
at 9:52 a.m. in Toronto. On an intraday basis, it hasn’t traded
stronger than parity since Jan. 22. One Canadian dollar buys
99.91 U.S. cents. Canada’s currency has weakened 1 percent this
month, the most since October.

Oil, Stocks

The country’s benchmark 10-year bonds were little changed
with yields at 1.99 percent. The 2.75 percent security maturing
in June 2022 traded at C$106.41.

Canada’s economy grew to an annualized C$1.56 trillion
($1.56 trillion) on gains in manufacturing, mining and energy,
Statistics Canada said. The report suggested growth rebounded in
the fourth quarter from the 0.6 percent annual pace seen from
July through September. The expansion has been supported by the
job market, with the unemployment rate falling to a four-year
low in December.

“In the last couple of months, we’ve seen temporary GDP
downside from disruptions in oil production in the east and
pipeline challenges in western Canada,” Emanuella Enenajor, an
economist at Canadian Imperial Bank of Commerce, said in a
telephone interview from Toronto, prior to the data release.
“We expect that there is some bounce back from those numbers.”

Central Bank

Bank of Canada Governor Mark Carney said Jan. 23 an
increase to his 1 percent benchmark interest rate is “less
imminent” and cut his fourth-quarter growth prediction to 1
percent from 2.5 percent.

Investors increased their expectations the Bank of Canada
will raise interest rates before the end of the year after the
data, pricing in 10.8 basis points of tightening by the Dec. 4
meeting, compared with 9.2 basis points yesterday, Bloomberg
calculations based on overnight index swaps show.

In a separate report, Statistics Canada said today its
index of raw-materials prices paid by manufacturers dropped 2
percent in December from November. Economists in a Bloomberg
survey had a median prediction of a 0.3 percent increase.

Retail sales in Germany, Europe’s largest economy, adjusted
for inflation and seasonal swings, dropped 1.7 percent from
November, when they rose a revised 0.6 percent, Germany’s
Federal Statistics Office in Wiesbaden said today.

The loonie has declined 3.4 percent during the past six
months among the 10 developed-nation currencies monitored by the
Bloomberg Correlation-Weighted Indexes. The greenback fell 3.6
percent.